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Organovo CEO: Closing IPO Window Could Spur More Reverse Mergers

Fri, 10/24/2014 - 06:45
Jeff Engel

Shifting perceptions and a cooling IPO market could lead more biotech startups to join a public stock exchange via a reverse merger with a shell company that is already publicly traded, says Organovo CEO Keith Murphy.

That’s the route his San Diego-based company took in 2012, merging with a shell company whose stock was traded over the counter. A decade ago, many pedigreed startups looking for a funding boost wouldn’t have done that, partly because it means the company becomes a thinly traded stock on a less prestigious exchange, at least at first.

But any negative public sentiments toward those types of deals have largely dissipated, Murphy says.

“I think things have totally changed,” Murphy says. “We were able to show that it really doesn’t matter anymore.”

Organovo, which has since moved up to the New York Stock Exchange, is one of several such biotech companies in recent years that have proven they’re worthy of Wall Street’s attention. San Diego-based Halozyme Therapeutics took a similar path from private biotech to over-the-counter stock to the Nasdaq stock exchange. This year, Madison, WI-based Cellectar Biosciences pulled off the same feat.

“A lot of biotech companies have now gone that route, which is what made us know it could be a success,” Murphy says. “You can step up to the next level.”

In fact, Murphy thinks these types of reverse mergers might increase in popularity once the biotech IPO window shuts tightly and startups need to look at alternative options for getting to the next level.

“When we did it, we were making our decision in the middle of 2011, when there was no IPO window at all,” Murphy says. “When the window closes, you’ll see more people do” the reverse merger with a publicly traded shell company. The upside is it’s a “lower-risk, cheaper option” for entering the public markets, although it requires “more leg work” afterward to make investors aware of the stock, he adds.

Xconomy caught up with Murphy this week at Dohmen Life Science Services’ Entrepreneur Summit in Milwaukee, a business conference that featured talks by Murphy, who previously spent a decade at Amgen; former Medtronic CEO Bill George; and Whole Foods Market co-founder and co-CEO John Mackey, among others.

During his speech, Murphy shared Organovo’s story and where it’s headed. In an interview before his talk, Murphy shared additional color with Xconomy.

Organovo, which was founded in 2007 and started lab operations in 2009, has drawn plenty of media attention over the past few years, thanks to its plan to use bio-printing technology to create functioning human tissue, like blood vessels, kidneys, and livers. But the vision of making live organs that could be implanted into sick patients is still years and hundreds of millions of dollars away.

In the mean time, Organovo has found a way to generate revenue right now. In August, Organovo announced that it created 3D human liver tissue in a petri dish that was able to detect that a pre-clinical drug candidate was harmful to the liver. Animal studies and other toxicity tests had determined the drug was safe.

Next month, Organovo will launch a contract research business that will test for toxic effects of pre-clinical drug compounds on the liver. It’s also gathering data that could allow it to extend the service to kidney drugs within 12 to 18 months, Murphy tells Xconomy.

Meanwhile, the influx of capital from the public markets and the contract research business should help Organovo get its planned therapeutic tissues into clinical trials within six years, Murphy says.

“Now we’re actually funded to do that,” Murphy says. “We are in animal studies today with several different things.”

Stumbling into the contract research business wasn’t serendipitous, Murphy says, just a case where Organovo heeded early discussions with potential pharma partners that if its bio-printed tissues could successfully predict toxicity, that service would generate plenty of demand. As a business, “you have to be dynamic,” Murphy says.

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West Coast Biotech Roundup: Genentech, Sutro, Amgen, Regulus & More

Thu, 10/23/2014 - 19:06
Alex Lash

Immunotherapy deals that could reach $1 billion? We’ve got two of them this week. Sure, those billion-dollar figures include, as they often do, a lot of biobucks, but the rest of the details in those deals—Genentech and NewLink Genetics; Celgene and Sutro Biopharma—are no small potatoes. Let’s get to the roundup.

—Roche’s Genentech division in South San Francisco, CA, and NewLink Genetics (NASDAQ: NLNK) of Ames, IA, said Monday Genentech will pay $150 million upfront for rights to NewLink’s cancer immunotherapy candidate NLG919, currently in Phase 1, that targets the IDO pathway. The companies will also collaborate on discovery of other compounds in that class. NewLink could earn up more than $1 billion in milestones and sales royalties if Genentech brings multiple products to market.

—Activist investor Daniel Loeb, who runs the hedge fund Third Point, began a campaign to break Amgen into two companies, one that would sell its commercial products like Enbrel, another to do riskier R&D. Amgen (NASDAQ: AMGN) acknowledged the Third Point campaign with a statement and said more updates would come during a business review on October 28.

—Amgen also announced Friday that Gladstone Institutes president R. Sanders “Sandy” Williams has joined its board of directors, which brings the number of board members to 13.

—Antibody developer Sutro Biopharma of South San Francisco, CA, extended a cancer immunotherapy collaboration with Celgene (NASDAQ: CELG) Thursday, with Celgene paying $90 million up front, as much as $95 million in R&D help for the next three years, and more than $1 billion in milestones. Celgene also gets an option to acquire Sutro and boosts its ownership in the company to 15 percent.

—The price of San Diego’s Regulus Therapeutics (NASDAQ: RGLS) shares more than doubled Wednesday after the company said its experimental drug for hepatitis C led to a significant reduction in viral load, according to interim results from an ongoing clinical study.

—Diagnostics firm Sequenta of South San Francisco, CA, said Monday it has nabbed an equity investment of undisclosed size from Celgene and other corporate investors who remained anonymous

—Vancouver, BC-based Zymeworks announced Wednesday an expansion of its antibody development deal with Eli Lilly, which was originally signed in January. The deal now includes future payments that could bring Zymeworks as much as $375 million.

— Norwest Venture Partners of Palo Alto, CA, led a $32 million Series C round in Telcare, a Bethesda, MD-based maker of a mobile diabetes management product that includes a wireless blood glucose meter.

—Tekmira Pharmaceuticals (NASDAQ:[[ticker: TKMR]]) of Vancouver, BC, said Tuesday it has begun a limited manufacturing run of its TKM-Ebola treatment, meant for people already infected or suspected to have infection. Supply should be available in December.

—San Diego-based Neothetics, an “aesthetic biotech” with substantial backing from Domain Associates and Rusnano MedInvest, filed for a $63 million IPO. Neothetics, previously known as Lithera, plans to use the proceeds to move into late-stage clinical trials with LIPO-202, an injectable drug for localized reduction of belly fat in non-obese patients.

—San Diego’s Edico Genome said its Dragen Bio-IT processor for analyzing genomic data is now broadly available to clinical labs and researchers using next-generation genome sequencing machines. Edico claims Dragen reduces the time to analyze a whole human genome from 24 hours to 18 minutes.

Photo courtesy of David McSpadden via Creative Commons.

Xconomy San Diego editor Bruce V. Bigelow contributed to this roundup.

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J&J, GSK, Tekmira, And Others Take Next Steps To Fight Ebola

Wed, 10/22/2014 - 18:39
Alex Lash

There’s been distressing Ebola-related news in recent days. The deadly virus continues to spread in West Africa, with more than 4,500 fatalities now reported, and efforts to halt its spread in the U.S. have been mired in controversy and confusion, forcing President Obama to appoint an Ebola “czar” to coordinate national response.

But there’s good news, too. The World Health Organization declared Nigeria Ebola-free after 19 reported cases. In the pharmaceutical world, there has also been progress from several companies, ranging in size from giant to startup. We’ll start at the top of the scale.

—GlaxoSmithKline (NYSE: GSK) CEO Andrew Witty said Wednesday that an “initial supply” of its Ebola vaccine, which it is developing and testing with help from the National Institutes of Health and other agencies, should be available before the end of 2014. The vaccine has begun Phase 1 safety trials in humans in the U.S., United Kingdom, and Mali. If all goes well, the company would like to start vaccinating healthcare workers in Sierra Leone, Liberia, and Guinea early next year.

—There’s more pharma news, this time with deal activity, which doesn’t happen often in this corner of the drug world. Johnson & Johnson (NYSE: JNJ) wants to start human clinical trials and offer an Ebola vaccine for emergency use in 2015. It has worked with Denmark’s Bavarian Nordic to develop a trivalent vaccine, aimed to prevent infection from the Zaire and Sudan Ebola strains and the Marburg virus, which like Ebola is in the filovirus family and causes a hemorrhagic fever.

Now J&J has put significant cash behind the collaboration. It has licensed the vaccine from Bavarian, paying $25 million up front, with milestones and royalties on sales outside Africa—a sign that companies now see a business case for Ebola products in Western markets.

In addition, Bavarian says it will deliver 1 million doses to J&J for $70.8 million up front and $28.5 million next year. There’s one more financial component to the deal: Johnson & Johnson Development Corp., the company’s venture group, will buy approximately $43 million worth of Bavarian Nordic shares. The companies have been working to combine the trivalent vaccine with technology from J&J’s Crucell group. Animal testing of the combination has shown complete protection against Ebola, the companies said Wednesday.

—More vaccine news came Wednesday from Baltimore, MD-based Profectus Biosciences, which has received two U.S. government grants totaling $17.1 million to push its program forward. (For more on U.S. government incentives to spur Ebola treatment, read my column from last month.) The cash comes from the departments of Defense and Health and Human Services, and will help the privately held Profectus test its vaccine against the Zaire strain in monkeys at one of the nation’s top infectious disease research labs in Galveston, TX. The test starts this week.

Like Bavarian Nordic, Profectus aims to produce a trivalent vaccine against the Zaire and Sudan strains of Ebola and Marburg, but first it must get through the Zaire trial in monkeys and move that vaccine into a small human trial, which could start as early as July, Profectus chief scientific officer John Eldridge said.

Profectus’s development of a trivalent vaccine stems from government concern that Ebola and other deadly viruses can be turned into weapons against soldiers and civilians. The Defense Department was “explicit about its requirement,” Eldridge said. “Up until less than a year ago, the majority of funding and attention in the field really came from the potential of these viruses to be used as bioterror weapons.”

“The end game is the trivalent vaccine,” Eldridge said. “The Ebola Zaire and Sudan strains are at opposite ends of a ‘spectrum,’ and most other [strains] are between them.”

The hope is that providing a vaccine against both, plus Marburg, would “provide protection against all challenge strains to date,” Eldridge said.

—Late Tuesday, Tekmira Pharmaceuticals (NASDAQ: TKMR) of Vancouver, BC, announced that it has begun a limited manufacturing run of its TKM-Ebola treatment—meant for people already infected or suspected to have infection. The treatment is specifically tailored to fight the strain of the virus responsible for the current outbreak. The company statement said supply of the drug should be available in December. In late September the drug, which is not currently allowed to be tested in clinical trials, got a green light from regulators for emergency use, and Tekmira said “a number of patients” had been treated with it. They include Richard Sacra, a doctor who was infected in Liberia and successfully treated back in the U.S. Xconomy reported on Tekmira CEO Mark Murray’s public appearance earlier this month.

Other companies working on Ebola drugs or vaccines include NewLink Genetics of Ames, IA, Chimerix of Durham, NC, and Mapp Biopharmaceutical of San Diego.

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Neothetics Files $63M IPO to Advance Drug That Melts “Love Handles”

Wed, 10/22/2014 - 16:30
Bruce V. Bigelow

A biotech company developing an injectable drug to shrink the excess fat that forms “love handles” says it plans to raise more than $63 million through an IPO.

San Diego-based Neothetics, previously known as Lithera, has substantial backing from Domain Associates and its Russian investment partner, Rusnano MedInvest. San Francisco-based Alta Partners also holds a minority stake in the company, which was founded in 2007.

After completing a mid-stage clinical trial of its lead drug candidate with 513 patients, Neothetics plans to use its IPO cash to advance to late-stage clinical trials. The company reported “a statistically significant reduction” in belly fat among patients who received injections of Neothetics lead compound, dubbed LIPO-202.

When Neothetics was just beginning the mid-stage trial in early 2013, CEO George Mahaffey said he hoped to emulate the success of Calabassas, CA-based Kythera Biopharmaceuticals (NASDAQ: KYTH), which had developed another injectable drug (sodium deoxycholate) for shrinking fat under the chin. Kythera went public two years ago, and Wall Street has embraced it, driving the company’s valuation to more than $760 million. In July, Kythera said the FDA had accepted its new drug application for regulatory review.

LIPO-202 is an injectable version of salmeterol xinafoate, a selective beta agonist already approved by the FDA as an aerosol inhalant for treating asthma (and marketed by GlaxoSmithKline as Serevent). The company says its studies suggest that salmeterol activates fat cell receptors, triggering a metabolic process called lipolysis that shrinks fat cells.

As an alternative to liposuction, Neothetics says there is currently no FDA-approved drug approved for reducing localized subcutaneous belly fat in non-obese patients, a process the company calls “body contouring.” Neothetics plans to target healthy people who are under 45 years old, and says women account for about 87 percent of the potential market. According to its IPO filing, Americans spent more than $12 billion on … Next Page »

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As Atlas Splits, Is There A Case To Make In Venture For Specialists?

Wed, 10/22/2014 - 07:30
Alex Lash

Readers of this column who are of a certain age might remember Chrissie Hynde of the Pretenders in black eyeliner, dressed as a diner waitress singing, “I’m special, so special, and I gotta have some of your attention.”

Swap “money” for “attention,” and it could be a refrain that venture capitalists are singing these days to their wealthy backers. Cash is flowing into venture funds at a post-recession high, and with that brass in pocket, more VCs are investing with a narrower focus, say industry observers. How to quantify these specialists is a moving target, but the trend has been ongoing for a few years: old diversified firms have split into tightly focused ones, and new ones have launched from scratch.

Hynde: Special.

“Five or 10 years ago you had a lot of $500 million-plus funds that included a healthcare or biotech practice, but now there’s a real bifurcation,” says Theresa Sorrentino Hajer, managing director of venture capital research at Cambridge Associates, an advisory firm for institutional investors—pension funds, school endowments and other limited partners that put money into venture funds.

Some data also suggest it pays to be a specialist, sticking either to IT or healthcare, although that suggestion is more of a hint on the healthcare side, as we’ll see in a moment.

Atlas Venture of Cambridge, MA, is the most recent example of what Hajer calls a “bifurcation,” announcing this month its tech and life science teams would part ways and raise their own funds.

Another example is Lightstone Ventures, formed in 2012 by the healthcare investors from Morgenthaler Ventures and Advanced Technology Ventures. A generation ago, says Lightstone general partner Mike Carusi, VCs tended to be generalists. But now “the science has gotten harder,” he says, which means “the need for operating partners with specialized technical know-how—folks with PhDs after their name—becomes more and more important. These resources are only applicable to one side of the house or the other, healthcare or IT, and thus the skill sets of the teams continue to diverge.”

To be sure, the venture world is never static. Firms change direction, partners come and go. But every cycle has its own unique properties. The Great Recession dealt a blow to venture capital returns and began a shakeout that many felt was overdue. Some LPs gave up on venture entirely, but the momentum has shifted, according to the National Venture Capital Association and Thomson Reuters. With three months to go, U.S. venture fundraising in 2014 is up to $23.8 billion, the first time in five years it has surpassed $20 billion, and it could threaten the $31.1 billion mark reached in 2006.

Carusi: Specialist.

So VCs have more money to invest. And more of those firms are specializing in tech or healthcare (or in even deeper specialties within those sectors). But are they doing better because of it? Here are two ways to slice it, using data from Cambridge Associates:

—For new investments made between 2001 and 2010 into IT companies, the gross internal rate of return made by diversified funds was only 8 percent. In contrast, the return for the specialist IT funds was 20.5 percent (or 2.7x gross multiple of invested capital vs. only 1.5x for the more general funds).

—For new investments made between 2001 and 2010 into healthcare companies, it’s more complicated. From 2001 to 2005, the diversified funds have a better track record than the specialists (11 percent vs 7.2 percent gross IRR; 1.6x vs. 1.3x multiple). As recently as 2012, Atlas Venture partner and blogger Bruce Booth used Cambridge data to underscore the better performance of diversified funds.

But since then, just like with Atlas itself, the story has changed a bit. Cambridge data now show that from 2006 to 2010, the healthcare specialists hold a slight advantage (13.1 percent vs. 11.3 percent gross IRR; 1.6x vs 1.5x multiple).
Perhaps that shift is simply a blip; it’s not wise to draw grand conclusions from such short time periods. But it’s also fair to note that the better performance by the healthcare specialists, boosted by two more years of return data, coincides with two years of unprecedented return activity in the healthcare sector.

Healthcare companies have accounted for 35 percent of the IPOs in the last 12 months. That’s more than double the contribution from the technology sector, according to the website IPOScoop.com.

There’s an argument to be made that the 2012 JOBS Act might help keep the IPO window open—or at least less boom-and-bust volatile as in the past, which in turn could bring more stability to assuage risk takers. Could there, in turn, be more motivation for healthcare investors, whose ranks until a couple years ago were thinning, now to go their own way? That, of course, depends upon … Next Page »

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StackIQ Raises $6M for Web-based IT Management Technology

Mon, 10/20/2014 - 16:23
Bruce V. Bigelow

San Diego-based StackIQ, which provides Web-based technology for managing highly distributed applications for “Big Data” and cloud computing, says today it has raised $6 million in a Series B round of funding.

The capital infusion will be used to expand StackIQ’s operations, including sales and marketing for cluster management software that helps to automate the operation of large-scale networks with tens, hundreds, or thousands of computer servers. A spokesman declined to disclose the current number of employees, citing competitive reasons.

In a statement this morning, StackIQ says new investors in the round include Grayhawk Capital, Keshif Ventures, the DLA Piper law firm, and OurCrowd, the online crowdfunding firm based in Jerusalem.

As we reported earlier this year, StackIQ was the first San Diego company to raise capital using OurCrowd, which provides an online platform that enables accredited individual investors to make pooled investments. The crowdfunding campaign ultimately raised slightly more than $1.2 million, according to a regulatory filing in June.

Including the Series B round, the company has raised a total of $10.5 million since it was founded in 2006, according to John Oh, who recently joined StackIQ as vice president of marketing. Existing investors Anthem Venture Partners and Avalon Ventures also participated in the latest round.

StackIQ says several unnamed Fortune 100 companies became customers this year, including “one of the world’s largest communications & media companies, a top 2 U.S. wireless carrier, major automobile manufacturer, and leading financial services companies.”

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San Diego’s Third-Quarter Venture Activity on Par, and Top 10 Deals

Mon, 10/20/2014 - 09:34
Bruce V. Bigelow

Venture capital funding for startups in the San Diego area ticked up slightly during the third quarter that ended Sept. 30, with $238.5 million invested in 27 deals, according to data from the MoneyTree Report.

That was about a 7.2 percent increase over the $222.4 million that VCs invested in deals in the previous quarter, and a 6.3 percent increase over the $224.3 million that venture firms invested in 28 startups during the same quarter in 2013. The MoneyTree Report is prepared by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Financial.

Yet San Diego has seen little change in overall venture activity from quarter to quarter since the beginning of the year. Here are some additional highlights of local VC activity from the MoneyTree data for San Diego:

—Life sciences startups continued to attract most of the capital, getting $168.6 million, or 71 percent, of all capital deployed in San Diego County. The 13 life science deals amounted to just under half of the total deals. The average deal size in San Diego’s life sciences sector during the third quarter amounted $8.8 million, increasing from $8 million in the same quarter of 2013.

—Venture funding in San Diego’s software sector increased by 38 percent over the previous quarter, with $37 million invested in six deals, compared to the $27 million that went into nine deals in the second quarter of 2014.

—Tech investments of all types—including software, semiconductors, computers and peripherals, IT services, and media companies—accounted for $56.1 million, increasing about 52 percent compared to the $37 million in tech investments during the prior quarter. This was up 177 percent over the same quarter last year, when all tech investments got just over $20 million.

—About 45 percent of third-quarter venture capital investments in San Diego went to early stage companies, a level comparable with the previous quarter. About 52 percent of the deals involved early stage companies, an increase from 46 percent in the prior quarter.

—Total investment dollars for expansion and later stage companies increased 5 percent from $124.8 million in the second quarter to $131.2 million in the third quarter. The deal count for expansion and later stage companies as well as the percentage of venture dollars invested in these companies was on par with the prior quarter.

Based on the MoneyTree data, the top 10 deals during the third quarter are listed below. The chart shows the name of company (and location), amount invested during the third quarter, business focus, and total amount of venture capital raised to date.

BioNano Genomics (San Diego) $31M DNA Analytics $76.4M Epic Sciences (San Diego) $30M Cancer Diagnostics $46.6M Tracon Pharmaceuticals (San Diego) $27M Biopharmaceutical $41M Acutus Medical (San Diego) $20.6M Medical Device $55.1M Astute Medical (San Diego) $20.1M Biomarker Diagnostics $110.7M Obalon Therapeutics (Carlsbad, CA) $16M Medical Device $49.3M Veritone (San Diego) $15M Software as a Service $15M SG Biofuels (San Diego) $11M Agricultural Biotech $34M Achates Power (San Diego) $10.9M Industrial Energy $65.3M Legend 3D (Carlsbad, CA) $10M 3D Imaging for Film Industry $46M Comments | Reprints | Share:          

RoboBusiness: Workhorse Robots, Starter Kits, and Internet of Bots

Mon, 10/20/2014 - 07:00
Martin LaMonica

Roboticists who attend business conferences don’t always have kind words for humanoid robots. It’s not that walking, talking androids aren’t cool, particularly if one could take the trash out for you. But entrepreneurs and investors in robotics are looking for something far more practical—and profitable—in the near term.

Commercial viability and pragmatism was one of the themes at last week’s RoboBusiness conference in Boston. The company that won the startup pitch competition was nLink, a Norwegian company that makes a machine to measure and drill holes in ceilings for construction workers. Rather than tout the crane-mounted machine’s autonomous robot features, founder Konrad Fangertun focused on the end result and its business model—“drilling holes into concrete ceilings as a service.”

During his keynote talk, iRobot CEO Colin Angle poked some fun at his own work from his student days at MIT, saying that building a legged robot to walk up stairs is a waste of time. IRobot sells stair-climbing robots to the military that use tracks and flippers and are far more effective at the task. Similarly, making hand-like grippers with four or five digits often isn’t necessary when simpler and cheaper grippers can be just as effective. “The goal isn’t to create a replica of a person; it’s to solve a problem,” Angle said.

Indeed, a walk around the conference floor showed that robots come in many different shapes—from tank-like machines with tracks, to robotic arms, to something that looks like a moving file cabinet. There were humanoid robots as well, but they used for research or very specialized needs, such as operating on the International Space Station.

A few other themes I picked up on during my visit:

Collaborative robots. Historically, robots have been industrial machines on the factory floor that were kept away from people for safety reasons. But that’s been changing as designers build robots to work alongside people.

That’s very much the point of Baxter, the manufacturing robot made by Rethink Robotics, which can be taught to perform a task by having a person move its arms. But the notion of having robots and humans working side by side is happening throughout the industry.

North Billerica, MA-based Harvest Automation, for example, sells a small robot designed to move potted plants around greenhouses and nurseries and is now working on a robot to fetch goods in warehouses that fulfill e-commerce orders, CEO John Kawola told me. The company envisions that a warehouse worker would walk and put requested items in a milk crate-size bin placed on a lower shelf. Later, the robot, which only comes up to about the knee, would drive up and collect bins when they’re filled.

Kiva Systems already makes robots for e-commerce warehouses, but since being acquired by Amazon two years ago, it’s focusing its efforts on Amazon facilities. “It’s created an opportunity in the market,” Kawola said. “And the e-commerce side of warehouses is exploding.”

Similarly, Vecna’s QC Bot is designed to work with nurses to deliver materials, such as medications and meals, in hospitals. It can also be used for telepresence. (In a sign of how important robotics is to healthcare, Vecna plans to host a robotics incubator at its offices in Cambridge as part of a MassRobotics initiative.)

The soft(ware) side of robotics. Robotics companies already borrow heavily from other industries for their components, such as sensors and wireless chips used in mobile phones. Similarly, robots can get relatively cheap gesture recognition capabilities from … Next Page »

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Shanghai Report: Big Questions About China’s Growth Plans

Mon, 10/20/2014 - 06:00
Michael A. Greeley

It only took a few days after I returned from China for my eyes to stop burning, and maybe the slight cough was really due to the changing seasons in Boston and not the air pollution in Shanghai (now I better understand the amenity in my hotel room—see below). A small price to pay to witness the extraordinary commercial activity in what may well be the largest economy in the world sometime in the next decade. And what a fascinating time to be there—although each time I go back I may be at risk of thinking it will be the most fascinating time to be there.

Arguably the recently introduced reforms by Premier Li Keqiang have ushered in dramatic economic and political advancement. China has never appeared so confident, so assertive. Since late 2012 the systematic purging of corrupt corporate and government officials, undertaken to bolster the public’s confidence in the Communist Party, has led to some spectacular falls from grace. One hopes that increased economic freedoms might gradually lead to greater political freedoms (although as seen in Hong Kong these past few weeks, that does not yet appear to be the case—the October 10 China Daily editorial was titled “HK Protesters Have No Valid Grievances”). Ironically, the intense focus on rooting out corruption may also be contributing to slowing economic growth, as Premier Li is dependent on those same government bureaucrats to implement his economic agenda—and many are undoubtedly quite distracted (worried) now.

Having grown up in Hong Kong, I have been fascinated for many years by the dramatic ascendancy of China; in my lifetime nearly 25 percent of the world’s population will have “come of age”—perhaps capped off with the IPO of Alibaba last month, now one of the largest internet companies in the world. But this economic engine requires significant growth and worrying signs are now quite evident. While the official GDP growth rate target for 2014 is 7.5 percent (analysts worry that growth below 7 percent will cause reforms to stall out), the Chinese Academy of Social Sciences announced last week that it forecasts growth to be 7.3 percent this year. Storm clouds are building. Other data points—some of which were reported in the China Daily newspaper last week.

  • Two of the four largest commercial banks in China cut rates to spur mortgage lending. It is quite clear that China has a real estate “issue”—through August 2014 home sales this year dropped 11 percent. And real estate is estimated to be about 25 percent of the Chinese economy.
  • Related news: the Central Bank of China cut reserve rates for the second time in the last 30 days to 3.4 percent to spur borrowing.
  • China experienced the greatest monthly steel export boom last month (up 73 percent year-over-year) due to soft local demand and perhaps indicating that Chinese steel is being dumped onto the global market—watch for a US protectionist backlash.
  • Car sales in China rose at the slowest monthly pace in September over the past 19 months, increasing 2.5 percent, down from about 20 percent last year.

While I was there, Barclays Research issued an analysis of state-owned companies which underscored the depth of the economic exposure the Communist Party is confronting. More than 25 percent of state-owned companies lost money in 2013 (as compared to 10 percent of private companies); the return on equity was calculated to be less than 5 percent for state-owned enterprises (vs. 14 percent for private). Just to complete the thought, return on assets—also 5 percent for state-owned as opposed to 9 percent for private companies. Clearly there is a significant amount of “unproductive” capital still tied up in the Chinese economy, which has led to a dramatic decline in listed equities for state-owned companies in the last 30 days (often times declines of greater than 20 percent).

So what I find so fascinating is watching the Chinese government manage this colossus to a more private capitalist system. This will be one of the greatest transference of asset ownership from collective to private status in the history of mankind—perhaps a little grandiose but the point still stands. Just this past week alone there were a series of developments which underscore this rapid pace of change—easy to dismiss any one of them, but when viewed collectively a clear pattern emerges.

  • The 2014 Report on Foreign Investment in China, issued by the University of International Business and Economics in Beijing (20 years ago it would have been hard to imagine that such an entity would even exist) determined that there was $118 billion of foreign direct investment in 2013 in country, of which $62 billion was in the services sector (up 14 percent year-over-year). There is a clear rotation away from manufacturing investment by foreigners in China.
  • German Chancellor Merkel welcomed Premier Li in Berlin last week and announced 110 new cooperation and investment agreements aggregating to $18 billion in value. In the midst of all that fanfare, four leading German “economic institutes” announced that German GDP would grow 1.2 percent in 2015—which is awkward when your guest is nervous about 7.3 percent.
  • After Germany, Premier Li spent three days in Russia signing only 40 agreements. Obviously Russia is anxiously tilting toward China as the rest of the world shuns the Kremlin—which further bolsters China’s role as a Super Power.
  • The Chinese seem to be on a US “shopping spree”—the $2 billion acquisition of the Waldorf Hotel in New York City was announced last week. The Rhodium Group estimated that another $10 billion of acquisitions would be announced shortly.

And given my professional interest in healthcare, I focused intently on developments in that sector, which were everywhere last week.

  • It was announced in Beijing that foreign entities can now directly invest and operate joint venture hospitals in China, while Hong Kong- and Macau-based investors can own and operate hospitals outright in certain selected cities. This was confirmed with great excitement by senior hospital executives I met with while in Shanghai.
  • The local healthcare issues are significant. Cities outside of Beijing in northern China reported air quality levels 20 times worse than healthy levels. In Beijing on Saturday PM 2.5 pollution particles measured over 500 micrograms per cubic meter of air—that should really be closer to single digits.
  • It was World Mental Health Day (October 10) while I was there. The China Daily reported that the 6,910 mental health specialists in Beijing were overwhelmed treating the over 50,000 patients (didn’t strike me as all that bad until I read on…). The Chinese Center for Disease Control and Prevention estimated—wait for it—that there are over 100 million people in China with mental health “problems,” of which 16 million were classified as with “very worrying conditions.”
  • Ebola was referenced but seemed to be characterized as an “African issue” still (although admittedly that might be unfair just reading three days’ worth of local newspapers).
  • The China Daily reported that “Sexting Still Popular Activity in US Despite Risks”—so it is not just the Chinese that are confronting these serious health risks!

And lastly, this same newspaper, which was only 12 pages long, dedicated one entire page to covering the NBA, undoubtedly appealing to some of those people with mental health problems.

This post also appears on Michael Greeley’s blog On the Flying Bridge, and is published here with permission.

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Innovation Hub: Introverts as Innovators

Fri, 10/17/2014 - 15:11
Kara Miller

Entrepreneurs, bosses, and leaders are often highly social and extroverted—take Steve Jobs or Richard Branson. They can work a room. They derive energy from being around others.

But what if being outgoing and extroverted isn’t actually the key to success in the workplace? Susan Cain, author of Quiet: The Power of Introverts in a World That Can’t Stop Talking, believes that innovation and introversion go together better than you might think.

[This interview has been edited and condensed. For the full conversation, visit www.innovationhub.org]

Kara Miller: Many innovators you hear about are larger-than-life characters. Are there introverted people in the shadows who are also part of the innovation process?

Susan Cain: In some ways, you almost can’t find a great innovation process without finding shy people who are a part of it. For example, the first personal computer was invented not by Steve Jobs, but by his partner Steve Wozniak, a very shy, introverted guy. Often, in these origin stories, we tend not to focus much on the contributions of the people who, by their nature, don’t really want us to focus on them.

KM: Is there a danger when these “silent partners” don’t end up with a major role in the history books?

SC: The real downside is that, when it comes time to dream up the next innovation, we don’t think about creating teams and processes that include shy, quiet members, or that effectively draw on the talents of the people who want to go off by themselves to do their work. A lot of people get to do their best work when they go off by themselves.

KM: What does the research show about the benefits of brainstorming versus sitting alone and coming up with something by yourself?

SC: We tend to think that collaboration only means sitting in a group of people bouncing around ideas. Over forty years of research on brainstorming shows that individuals who brainstorm by themselves produce more and better ideas than groups of people who brainstorm together. Most people are working in gigantic open spaces, with no respite at all from listening to other people’s conversations. These spaces make people much less productive. They make people physically ill—literally. But it’s a lot less expensive to design an office with no walls.

KM: If you, on behalf of introverts, could give one piece of advice to the extroverts of the world, what would it be?

SC: There’s research that shows that introverted leaders deliver better outcomes than extroverts do when they’re managing proactive employees, because introverted leaders are better at listening, cultivating other people’s ideas, and letting those ideas fly, as opposed to putting their own stamp on things. That’s one example of a way that extroverts could learn from introverts.

Mikaela Lefrak contributed to this write-up.

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West Coast Biotech Roundup: Illumina, Atara, Invitae, Canaan & More

Fri, 10/17/2014 - 07:30
Alex Lash

From big venture firms to tiny genomics startups, we’ve got plenty to round up this week—beyond biotech, too, as the San Francisco Giants head east to the biggest baseball rodeo for the third time in five years, thanks to Seattle native Travis Ishikawa (pictured). Here’s the windup, and the pitch…

—Canaan Partners of Westport, CT, and Menlo Park, CA, closed its tenth general fund with $675 million in commitments, the ninth largest venture fund raised in 2014.

—Invitae, a San Francisco-based genetic testing company, raised $120 million in a Series F round of financing. The funds came from a long list of investors. New investors included Decheng Capital, Deerfield Management, OrbiMed, and Wellington Management, while existing investors coming back included Casdin Capital, Genesys Capital, Genomic Health, and Invitae CEO Randy Scott. Scott is the former CEO of Genomic Health.

—The National Institutes of Health awarded nearly $32 million to solve big data problems in genomics and other healthcare fields. The initial investment will establish big data “centers of excellence” at 11 research centers, including UCLA, The Scripps Research Institute in San Diego, Stanford University; UC Santa Cruz, and the University of Southern California.

—Atara Biotherapeutics of Brisbane, CA, raised $55 million in its public debut on NASDAQ Thursday after postponing its IPO try earlier this year.

—Immune Design (NASDAQ: IMDZ) of Seattle and Paris-based multinational drug firm Sanofi (NYSE: SNY) announced Thursday a joint development project for Herpes simplex virus (HSV) treatments. Both companies will contribute a vaccine candidate, and Sanofi will be responsible for Phase 3 development and commercialization.

—A surgical team at UC San Diego’s Sanford Stem Cell Clinical Center is ready to carry out the first human clinical trial of a stem cell-derived therapy for patients with type 1 diabetes. Doctors plan to implant embryonic stem cells engineered by ViaCyte of San Diego to grow into healthy pancreatic cells that produce insulin and related hormones.

—San Diego-based Illumina (NASDAQ: ILMN) revealed the first three companies admitted to its six-month accelerator program in San Francisco for genomics-related startups. The three companies—Encoded Genomics, Xcell Biosciences, and EpiBiome—get full access to Illumina’s next-generation gene sequencing systems.

—DNAtrix, a biotech based in San Diego and Houston that is modifying viruses to treat the most aggressive forms of cancer, said it has raised $20 million in a Series B round led by Shanghai-based Morningside Ventures. Existing investors, including the Houston-based Mercury Fund and San Antonio, TX-based Targeted Fund, joined in the round.

—The FDA gave its approval to pirfenidone (Esbriet) for the treatment of idiopathic pulmonary fibrosis. The drug is owned by Roche, which acquired it in late August when it bought Intermune of Brisbane, CA, for $8.3 billion. The FDA also approved another IPF drug, nintedanib (Ofev) from Boehringer Ingelheim.

—Shares of Aethlon Medical, a San Diego medical device company, closed at 24 cents a share yesterday, after leaping 9 cents (a 60 percent gain) in over-the-counter trading after the company said its experimental blood-filtration technology was used to treat an Ebola-infected patient in Germany.

—Seattle’s Kineta said Tuesday that it has launched a Phase 1b trial in psoriasis for its drug candidate ShK-186. It also plans to test the drug against psoriatic arthritis in the next few months.

– Xconomy San Diego editor Bruce Bigelow and Xconomy Seattle editor Ben Romano came in from the bullpen to contribute to this report.

 

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VC Funding Still Robust as Year-to-Date Total Exceeds 2013

Fri, 10/17/2014 - 01:01
Bruce V. Bigelow

Venture capital activity is down from a 13-year high during the second quarter, but a new MoneyTree Report released today shows that venture funding was still going strong in the three months that ended Sept. 30, with $9.9 billion invested in 1,023 deals.

That was almost a 27 percent drop from the $13.5 billion that VCs invested in the previous quarter, and a 9 percent decline in deals, according to MoneyTree data—reinforcing the early returns from CB Insights on third-quarter venture capital activity.

The MoneyTree Report, prepared by Pricewaterhouse Coopers and the National Venture Capital Association from data provided by Thomson Reuters, doesn’t always align with the quarterly survey from CB Insights. Another source of data on VC activity, Dow Jones VentureSource, reported that VCs invested $11 billion in 899 deals nationwide over the three months that ended Sept. 30—but also showed that was a decline from a surge in the previous quarter.

The absolute numbers vary because of different criteria that each group uses to count venture deals, investment tranches, and types of deals. There even are significant differences between VentureSource and MoneyTree in listing the biggest venture deals each quarter. (Our list of MoneyTree’s Top 10 Deals is below.)

Nevertheless, all three sources show that venture funding is running at a higher rate in 2014 than it has in years. According to the MoneyTree Report, venture firms have invested more than $33 billion in U.S. startups through the first three quarters of 2014—already surpassing the $29.8 billion total that VCs invested in all of 2013.

Software continues to get more venture funding than any other sector, with VCs investing $3.7 billion in 418 deals in the third quarter, according to the MoneyTree Report. While that was down from the previous quarter, Internet-specific investments remained steady, as VCs invested almost $3.2 billion in 248 deals during the quarter.

Assuming venture investments of $9 billion or so in the fourth quarter, the total for 2014 should come in around $42 billion. That would be almost 41 percent more than last year’s total, and about 61 percent higher that the $26 billion average total over the previous five years.

The number of deals, however, is running at … Next Page »

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Canaan Closes $675M Fund, One Of Venture’s Ten Largest This Year

Thu, 10/16/2014 - 15:07
Alex Lash

In a year of big venture capital numbers, Canaan Partners has provided one of the biggest. The Westport, CT-based firm announced Thursday a $675 million fund, its tenth.

As with its previous general funds, Canaan, which also has a main office in Silicon Valley, will put the money into both tech and life sciences. Both sectors have provided ample exits for the firm in the past twelve months. Canaan counts twelve total, including biopharma firms Labrys Biologics and Civitas Therapeutics, and on the tech side, Skybox Imaging and Metacloud.

According to the National Venture Capital Association, Canaan X is the ninth largest fund raised in 2014, and the only one in the top ten with a large biotech commitment. It also arrives less than three years after the firm closed its ninth fund with $600 million in commitments.

The recent success is in part a result of a strategy shift about a decade ago, says general partner Wende Hutton (pictured). “Since 2005 we’ve had a focus on early stage and seed stage companies, we’re talking handcrafted deals, small amounts to take early companies forward into their first institutional rounds,” she said. “That is something different from prior generations of Canaan, and many of our lucrative returns have been early-stage successes.”

That doesn’t always mean taking huge technological risks, however. On the biotech side, two of the big “early stage” wins for Canaan were built around relatively advanced products that had stalled out at bigger companies. “We do look for opportunities where we can take forward clinical assets with a lot of data or intellectual property in back of them,” said Hutton.

One was Labrys, which Canaan and Series A syndicate partner venBio formed around a treatment for migraine that they licensed from Pfizer in late 2011. Another was San Diego’s Advanced BioHealing, which Shire bought for $750 million in 2011. ABH was based on Dermagraft, a commercial wound healing product that Smith & Nephew was no longer interested in carrying. (That deal ended up as a boondoggle for Shire, which sold its regenerative medicine business in 2014 and wrote off Dermagraft as a $650 million loss.)

On the tech side, general partner Dan Ciporin, one of the firm’s tech investors based in New York, said areas ripe for disruption are the financial sector, where Ciporin led the firm’s investment in LendingClub; marketplaces like ridesharing and real estate; and storage technology.

The tenth fund will follow the previous rule of thumb for the firm: two-thirds allocated to tech, one-third to health care. The firm will also pursue the growing field of digital health, which incorporates elements of both sectors. When asked which pot of money the digital health funds will come from, Ciporin said it would generally hinge upon which partner is leading the deal.

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Illumina Admits First Startup Accelerator Class

Wed, 10/15/2014 - 16:47
Alex Lash

Bioinformatics giant Illumina (NASDAQ: ILMN) is getting into the accelerator game, along with other players in the life sciences and other fields. On Wednesday it announced the first three startups chosen to start the program this fall at its San Francisco lab space.

San Diego-based Illumina, which makes genomic analysis systems, unveiled the program in February, joining the growing list of academic institutions, venture-backed groups, and life science corporations building start-up space in the Bay Area and beyond. Not least among the benefits of the Illumina accelerator program is access to the company’s high-end gene sequencing systems, which are installed  in the lab space Illumina has leased near the Mission Bay campus of the University of California, San Francisco.

The accelerator’s terms are similar to those offered at other programs of its kind: The young companies will receive seed investments in exchange for an equity stake, as well as business advice from expert mentors. Illumina’s partners in nurturing the growth of the startups are billionaire Russian investor Yuri Milner and Silicon Valley Bank.

The first three companies in the six-month Illumina program are Encoded Genomics, Xcell Biosciences, and EpiBiome.

Both Xcell and Encoded are currently residents of other startup programs. Xcell, which is working on a new way to find rare cancer cells in blood samples and grow the cell population to facilitate testing, is in Bayer Healthcare’s CoLaborator, which houses seven startups in Mission Bay. Encoded, which has kept details of its genomics-related work more guarded, occupies space at QB3@953, a San Francisco incubator jointly run by Johnson & Johnson’s Janssen Labs and QB3, a University of California-affiliated group.

EpiBiome jumped the gun and announced its selection for the Illumina program in September. Its initial goal is to develop anti-infective treatments for cows.

The list of other players that run or support Bay area incubators or accelerators includes the University of California, Stanford University, Peter Thiel’s private foundation, Y Combinator, Bayer Healthcare, and Johnson & Johnson. Some of these programs focus on the life sciences, and some are tech accelerators expanding their reach into biotech, as we reported here about Y Combinator and StartX.

Just last week, Xconomy reported that the investment group SOS Ventures has leased space for a new synthetic biology accelerator, IndieBio, in San Francisco’s mid-Market neighborhood, which is better known for hotels, shopping, and more recently, Twitter’s new headquarters.

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Qualcomm and Techstars Establish Accelerator for Robotics Startups

Wed, 10/15/2014 - 16:35
Bruce V. Bigelow

As the global market tops out for advanced smartphone processors, radios, and other wireless chips, Qualcomm (NASDAQ: QCOM is staking a claim in robotics.

Under a partnership with Boulder, CO-based Techstars announced today, the wireless technology giant plans to host a four-month robotics accelerator for 10 startups at its San Diego headquarters next year. The new Qualcomm Robotics Accelerator, powered by Techstars, is intended to accelerate the development of next-generation robots and intelligent machines.

Qualcomm says it has committed over $1 million in aggregate funding to startups admitted to the program. A Qualcomm spokesman says the company has not yet named a managing director for the accelerator, which will be run with assistance and insights from Techstars.

Asked if Qualcomm technology will be used as a criterion for admitting companies to the accelerator, the spokesman responds in an e-mail: “The program is open to anyone and everyone in the robotics space regardless of the technology they use. The only criteria [are] that the companies have great teams with strong, thoughtful ideas, and the ability to execute. They also need to be focused on building the next generation of robotics and smart machines.”

Along with Silicon Valley’s Y Combinator, Techstars has emerged as one of the nation’s most successful programs for mentoring and investing in seed-stage tech startups. The accelerator was founded in 2006 by software entrepreneur David Cohen, who remains Techstars CEO, and Brad Feld, who is a managing director of the Boulder-based venture firm Foundry Group.

After enrolling its … Next Page »

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Ensighten Buys Anametrix Amid Consolidation in Digital Marketing

Wed, 10/15/2014 - 10:00
Bruce V. Bigelow

San Jose, CA-based Ensighten, which provides Web-based tag management technology for corporate customers, says today it has acquired Anametrix, a San Diego specialist in software-as-a-service used to analyze and optimize multi-channel digital marketing.

It is Ensighten’s second acquisition this year, and extends a wave of consolidation that has been underway for more than a year among digital media and marketing companies.

In an interview yesterday, Ensighten founder and CEO Josh Manion declined to disclose terms of the deal.

A source familiar with the buyout, however, describes it as a cash-and-stock deal in which the valuation ultimately depends on how well Ensighten does from here.

Josh Manion

Manion founded the company in Cupertino in 2009, moved it to San Jose in 2012, and says Ensighten now has about 230 employees. The company has raised at least $55 million from investors, according to Crunchbase, and my source says Ensighten’s year-over-year revenue growth is 150 percent.

Anametrix has raised about $7 million from investors since WebSideStory founder Blaise Barrelet started the company in 2010 with funding through his Analytics Ventures fund. Other investors include the San Diego private equity firm TVC Capital, which invested $4.4 million in late 2012, Airtek Capital Group, WMAS Management, Alain Schreiber; and former Summit Partners managing director Walter Kortschak.

Anametrix has about 35 employees at its San Diego headquarters. Manion says he not only plans to keep those operations in San Diego, but expand by “aggressively recruiting.”

The Anametrix deal follows the Dentsu Aegis Network’s acquisition last month of San Diego-based Covario and its … Next Page »

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Venture Firms Turn Down Funding Volume, but Still Rockin’ in Q3

Tue, 10/14/2014 - 08:00
Bruce V. Bigelow

Venture capital activity descended from the stratosphere during the third quarter, but it was still flying high, as venture firms invested nearly $9.8 billion in 879 deals across the United States, according to a report released today by the financial data firm CB Insights.

The amount invested during the quarter was down 30 percent from the $13.9 billion that VCs deployed in the previous quarter, and the deal count was down by 10 percent from the 974 deals that CB Insights counted in the second quarter. But it still marked the third consecutive quarter when VC funding exceeded $9 billion, according to the report.

The accumulated total for VC funding so far this year amounts to more than $33.7 billion—a 59 percent leap from the $21.9 billion deployed during the first three quarters of 2013. As we previously reported, mega venture investments in Airbnb, Uber, and Pinterest helped drive second-quarter VC funding to a 13-year high.

With its quick snapshot of quarterly VC activity, CB Insights is usually first to release its data, which counts only venture capital investments (including corporate venture) in emerging companies. The quarterly MoneyTree Report, which provides a more detailed survey of third-quarter venture capital activity, is set for release later this week.

U.S. venture activity (courtesy CB Insights)

In its 114-page report, CB Insights notes that venture funding for startups increased in New York to a five-quarter high, with close to $1.4 billion invested in 122 deals.

An astounding 85 percent of New York’s venture dollars went … Next Page »

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Untying the Knots in Big Data and Big Biology: Q&A with Andrew Su

Mon, 10/13/2014 - 15:15
Bruce V. Bigelow

As big data becomes increasingly important in using genomic information, the National Institutes of Health is funding a sweeping initiative to help untie the knots that make it hard to extract and apply meaningful information from huge biomedical data sets.

The program was conceived, in the words of NIH Director Francis Collins, to “overcome the obstacles to maximizing the utility of the mammoth data sets that are emerging at an accelerated pace.” The funding is intended to develop innovative approaches, software, computational tools, and other resources needed to pull meaningful information from massive data sets on everything from genomics to patients’ medical records.

In San Diego, The Scripps Research Institute (TSRI) and Scripps Translational Science Institute will get about $4.4 million in NIH funding announced last week that is intended to help researchers find new ways to analyze and use increasingly complex biomedical data. The institutes are part of a newly formed consortium designated to receive a total of $11 million to establish a new UCLA Center of Excellence for Big Data Computing. The center’s director is Peipei Ping, a UCLA professor of medicine and physiology whose research is currently focused on understanding proteome biology in cardiovascular medicine. Proteomics refers to the study of proteins.

Andrew Su

“We will be developing a variety of technologies for proteomics,” says Andrew Su, a TSRI associate professor who is a co-director of the new center. In an e-mail exchange over the weekend, Su said new techniques are needed for researchers to better identify post-translational modifications in proteins and to correlate changes to genetic variants. (My Q&A with Su is below.)

The new center also will tap into the Scripps Wellderly Genome Resource, a DNA data set that currently has genomic information on more than 1,300 people who have lived at least 80 years without developing any chronic disease. Among other things, researchers at the Scripps Translational Science Institute and Scripps Health are compiling the data to provide a master reference of what a healthy human genome looks like.

NIH is making an initial investment of nearly $32 million in fiscal 2014 to establish 11 similar “centers of excellence” throughout the United States. They include new centers at the University of Wisconsin-Madison; Stanford University; UC Santa Cruz, Harvard Medical School, and the University of Southern California.

The agency also provided funding for a 12th program, called ENIGMA, focused on human brain diseases that is collecting … Next Page »

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How Much Should I Work?

Mon, 10/13/2014 - 01:01
Joe Chung

My son, a member of the optimization generation, where pretty much every aspect of his life will be tracked, measured, and ultimately ruled by the Alg, posed a fascinating question to me the other day. He simply asked, “How much should I work?”

Now, the context for the question is that he’s undoubtedly a Type A who throws himself into his pursuits with unbelievable intensity, but his job is somewhat loosely structured so that he has a huge amount of discretion over how he allocates his hours and in particular how many hours he works at all. (Hint: he works a LOT.)

So I traced an approximation of the following graph on a restaurant table top:

The X-axis is the average number of hours per day spent working. Zero is of course zero, and 24 means that he would be literally working 24 hours every day, 7 days per week without sleeping! The Y-axis is job productivity measured in percentage of one’s possible potential. So 100 percent is the best one can possibly be.

So obviously if he works zero hours he will achieve exactly zero percent of his potential productivity. On the other end of the X-axis, working continuously without sleeping will also yield zero percent (I’m not allowing negative productivity just to keep things simple), and in fact if he worked so hard that he never slept he might actually die! So in between these two extremes, the graph must surely rise to 100 and fall back down again to zero. In my hypothetical graph I start with a fairly steep rise as the average hours per day goes up, but following the law of diminishing returns, the productivity curve must flatten so that each additional hour per day yields less and less of an increase in productivity. Finally the curve can rise no further having reached 100 percent, and from there the only direction to go is down!

Now at this point, which happens to be around 12 hours per day on my made-up graph (i.e., equating to 84 hours per week), my son is working so hard that spending more time at work actually begins to decrease productivity due to making errors, losing track of things, miscommunications, etc. Once he increases his hours to the point of seriously cutting into sleep, meals, hygiene, and other normal bodily functions, his productivity plummets as errors pile up, e-mails are left unanswered, and important meetings are forgotten in a delirious haze of ill temper and body odor.

But the important takeaway from staring at the curve is that for every level of productivity, except 100 percent, there are actually two levels of work hours that correspond. So at the point at which he is averaging 18 work hours per day yielding a productivity of about 25 percent, at least according to my particular graph, he could also work just 3 hours per day and achieve the same productivity and presumably be a much more pleasant person to share an elevator with. Which brings us to an obvious truth: No matter what level of productivity you are achieving, you are much better off being on the left side of the curve than on the right!

What’s interesting about this line of thinking is that I strongly suspect that the vast majority of driven, hard-working Type A’s are always on the wrong side. Their personalities lead them to push themselves as hard as they can until something (e.g., partner, close friend, nervous breakdown), actually pushes back. If that’s true, then they basically push themselves until they are well past their optimum output and down the declining right side of the hump until something is actually breaking, whereas they could achieve the same level of productivity by working several fewer hours per day.

So to finally answer my son’s question, here are a few simple rules:

1. At the very least, try not to be too far down the right side of the curve. Recognize the signs of declining productivity by seeking out feedback from the people you work for and work with. When they say you’re working too hard, you probably are.

2. Notice how your allocation of non-working hours affects your overall job performance. If your job requires that you be creative, personable, inspiring, etc., you’re probably not going to be those things for long if you are working yourself to death.

3. Experiment. Like any good data-driven analytical optimization, you need to create a varied set of data points from which you can draw comparisons. Try different levels of work and attempt to infer your personal productivity graph, decide where you want to be, and try to be on the left side of the graph. It won’t be perfect, and of course one can’t really measure productivity on a single axis, but it’s probably better than just going pedal to the metal until you burn out!

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Doctors Close to Implanting First Stem-Cell Therapy for Diabetes

Fri, 10/10/2014 - 11:27
Bruce V. Bigelow

Researchers from San Diego-based ViaCyte and UC San Diego provided new details about the first-ever human clinical trial of a stem cell-derived therapy for patients with type 1 diabetes yesterday at a scientific symposium at The Salk Institute.

The early stage clinical trial is intended to test the safety of an approach that ViaCyte has spent over 12 years developing, according to Kevin D’Armour, ViaCyte’s chief scientific officer.

The approach, called islet replacement therapy, implants a semi-permeable packet containing human embryonic stem cells just under the skin of patients with type 1 diabetes. ViaCyte has engineered the stem cells to grow into healthy pancreatic cells that produce insulin and other hormones used to maintain normal levels of blood sugar.

UC San Diego is overseeing the first cohort of patients in the clinical trial, and a simple surgical procedure to implant ViaCyte’s packets in the first patient is scheduled for Oct. 21, according to Robert Henry, a UC San Diego professor of medicine and chief of endocrinology, metabolism, and diabetes at the VA San Diego Healthcare System. Henry said two more patients would get the implants in November and December.

“By the end of the year, we should have a significant amount of information about the first three patients in the first cohort,” Henry said in a heavily attended presentation at the 9th Annual Scientific Symposium of the “Stem Cell Meeting on the Mesa.”

The ViaCyte trial represents “the absolute leading edge of stem cell research,” said Larry Goldstein, a leading research scientist in regenerative medicine at UC San Diego and director of the university’s new Sanford Stem Cell Clinical Center. Only a handful of similar efforts in stem cell research have gotten as far as human clinical trials, Goldstein added.

Research published yesterday in the journal Cell describes a … Next Page »

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